Forex futures trading, introduced in 1970s, is buying or selling a specified amount of a given currency at a predetermined price on a set date in the future. Forex futures trading are operated in various countries. All forex futures are written with a specific termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initial position. Typically, one of the currencies in forex futures trading is USD. Forex futures trading serve two primary purposes as financial instruments. First, they can be used by companies or sole proprietors to remove the exchange-rate risk inherent in cross-border transactions. Second, they can be used by investors to speculate and get profit from currency exchange-rate fluctuations.
Forex futures trading gain popularity worldwide for its distinguished advantages. Forex futures trading operates in much the same way as traditional futures, such as for commodities: The futures are purchased on a contract, which specifies the currency pairs, the amount, the date of purchase and the price of the purchase on that date. There is, however, one key difference between forex futures trading and traditional futures trading: forex futures are not traded on a centralized exchange; it can be traded in different exchanges worldwide. For example, people can choose to trade in the US market or Japan market etc. Vast majority of forex futures are traded through the Chicago Mercantile Exchange (CME). Many brokerage companies provides platform for forex futures trading such as IKON Platform, which provides much wider choices for forex traders. Traditional forex futures don’t possess much flexibility in choosing different exchanges worldwide. Another key difference between forex futures trading and traditional futures trading is: forex futures trading are accessible 24 hours without cease worldwide because the forex futures market runs around the clock, which lacks in most day trading traditional futures. But forex futures have its own distinguished disadvantages such as it needs more capital investment. Some before forex traders trade forex futures; they should weigh the advantages and disadvantages of forex futures trading first and then make right decisions.
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